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Hedge Funds Have Never Been This Bullish On Barings BDC, Inc. (BBDC)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have gone over 730 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article we look at what those investors think of Barings BDC, Inc. (NYSE:BBDC).

Is Barings BDC, Inc. (NYSE:BBDC) the right investment to pursue these days? Prominent investors are betting on the stock. The number of long hedge fund bets advanced by 1 in recent months. Our calculations also showed that BBDC isn’t among the 30 most popular stocks among hedge funds (see the video below). BBDC was in 13 hedge funds’ portfolios at the end of the second quarter of 2019. There were 12 hedge funds in our database with BBDC positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

MILLENNIUM MANAGEMENT

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the key hedge fund action regarding Barings BDC, Inc. (NYSE:BBDC).

What does smart money think about Barings BDC, Inc. (NYSE:BBDC)?

At Q2’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in BBDC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with BBDC Positions

More specifically, Clough Capital Partners was the largest shareholder of Barings BDC, Inc. (NYSE:BBDC), with a stake worth $10.6 million reported as of the end of March. Trailing Clough Capital Partners was Weiss Asset Management, which amassed a stake valued at $6.3 million. Arrowstreet Capital, Millennium Management, and McKinley Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

As industrywide interest jumped, key money managers were breaking ground themselves. Weiss Asset Management, managed by Andrew Weiss, initiated the most outsized position in Barings BDC, Inc. (NYSE:BBDC). Weiss Asset Management had $6.3 million invested in the company at the end of the quarter. Phillip Goldstein, Andrew Dakos and Steven Samuels’s Bulldog Investors also initiated a $0.8 million position during the quarter. The only other fund with a brand new BBDC position is Michael Gelband’s ExodusPoint Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Barings BDC, Inc. (NYSE:BBDC) but similarly valued. We will take a look at Akero Therapeutics, Inc. (NASDAQ:AKRO), Exterran Corporation (NYSE:EXTN), The Hackett Group, Inc. (NASDAQ:HCKT), and ShotSpotter, Inc. (NASDAQ:SSTI). All of these stocks’ market caps are similar to BBDC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AKRO 15 74921 15
EXTN 14 66299 -4
HCKT 15 77610 5
SSTI 6 23044 -1
Average 12.5 60469 3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $32 million in BBDC’s case. Akero Therapeutics, Inc. (NASDAQ:AKRO) is the most popular stock in this table. On the other hand ShotSpotter, Inc. (NASDAQ:SSTI) is the least popular one with only 6 bullish hedge fund positions. Barings BDC, Inc. (NYSE:BBDC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on BBDC, though not to the same extent, as the stock returned 4.6% during the third quarter and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.

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